Quite what was going through the minds of the hardcore Republican holdouts on Thursday night is hard to fathom. Partly, one imagines, they could see that the plan proposed by their leader, House Speaker John Boehner, would get shot down in the Senate – as the Democrats there were threatening to do – and so were unwilling to blot their conservative credentials by backing a futile compromise.

This is not the first time that Boehner has proved himself to be an inept parliamentarian. But this time Boehner was out-played by the tea party, the Club for Growth and even Sarah Palin, all pushing for the conservative rump to oppose his plan on the grounds that it didn't go far enough in throttling the government.

Palin even put out a chilling message on Facebook – that's modern politics for you – before the planned vote on Thursday, hinting at primary challenges from the right against those Republicans voting for the Boehner bill.

Some of the Republican nay-sayers may even believe the – how can one put this politely? – nonsense about a default being a way of curbing the growth of government. Well it is, assuming you also think that one way to lose weight is by cutting off your head.

What happens next? The House Republican leadership will probably try and retool their plan to win the last few crucial votes on Friday, a modest enough aim, although it eluded them on Thursday night.

Democrats were crowing at Boehner's failure to win over his conservative hardcore. But they should beware of premature celebration: the reaction of the financial markets on Friday alone may make them wish Boehner's plan had passed.

The potential default deadline of 2 August – next Tuesday – looms closer, and another day lost in arm-twisting and procedural wrangling does nothing to sooth the markets. But more importantly, although the House Democrats maintained an admirable unity they might have been better advised to at least offer to support the Republican debt ceiling bill.

Instead, the Democrats wanted to enjoy the Republican discomfort from the sidelines. Frankly the discomfort for Republicans would have been far worse if the House Democrats had backed Boehner.

I imagine many Democrats will disagree with me here. But I'd say the severity of the threats to the US economy means the Democratic party should be willing to avoid even a technical default. That's one way of showing a stark contrast with the selfish extremists of the tea party movement.

By the same token, the White House could also have backed the Boehner plan in the House – on the grounds that something is better than nothing – rather than posturing over vetoes. The smart move would have been to get something through the House and then retool it in the Senate. That seems a forlorn hope now.

Tactically, the Democrats may have won tonight (or more accurately: the Republicans lost). But strategically, nothing has been passed, the debt ceiling has not been raised, and a deal is no closer. A weak and humiliated Speaker of the House is not going to be a helpful partner in searching for an answer. Remember: many Republican votes are needed to pass any debt ceiling increase through the House.

The severity of the market reaction on Friday may bring everyone in Congress and Pennsylvania Avenue to their senses. Because nothing else looks like it is going to.